Scope of holiday carry-over due to sickness clarified

The Employment Appeal Tribunal has ruled that an employee who fails to take holiday during the leave year it accrues due to sickness is entitled to carry it over for up to 18 months. Further, this carry-over entitlement is applicable as much to employees who are ‘unwilling’ to take their holiday during sickness absence, as to those who are unable to do so.

Background

The Working Time Regulations (‘WTR’) provide at Regulation 9 (13) that annual leave may only be taken in the year in respect of which it is due and that it may not be replaced by a payment in lieu, except where a worker’s employment is terminated. Case law has established that to some extent ‘sickness trumps holiday’ when it comes to a worker’s ‘Euroleave’ entitlement, i.e. the four weeks’ annual leave entitlement derived from the European Working Time Directive (‘WTD’). If a worker fails to take their Euroleave due to sickness, then they are entitled to carry it forward to into future holiday years. Such roll-forward will happen automatically, without the worker needing to do anything. However, if a worker remains on long term sick leave their Euroleave cannot be carried forward indefinitely. To date there has been a lack of clarity as to the time limit for this carry-over entitlement. In Plumb v Duncan Print Group Ltd, the Employment Appeal Tribunal (‘EAT’) has provided some helpful clarity.

Facts

Mr Plumb worked as a printer. He had an accident at work in April 2010 and remained absent on sick leave until 10 February 2014, when his employer dismissed him. He had not taken annual leave for the leave years 2010, 2011 and 2012. However in August 2013 he had requested to take 20 days paid annual leave for each of these earlier holiday years. This request was refused. On termination he brought a claim for unpaid holiday in relation to these leave years.

Decision

The employment tribunal dismissed Mr Plumb’s claim because he had been unable to show that his medical condition was the actual reason he had not sought to take his leave. However, on appeal the EAT held that the tribunal had misapplied the law in that a worker on sick leave has ‘a choice’. They can elect to take annual leave during their sickness absence, but they cannot be compelled to do so. Just because a worker chooses not to take leave during sickness absence does not prevent them for exercising this right at a later date.

On the issue of time limits for carry over, the EAT ruled that the balance of European case law provided that the WTD requires carry-over for up to 18 months (notwithstanding some previous suggestion that it might to possibly to justify a 15 month cut-off). The EAT held that this same time limit should be ‘read-into’ the WTR. Therefore the entitlement to carry forward unused Euroleave due to sickness under the WTR can be limited to 18 months from the end of the leave year in which it accrued.

Comment

Given the importance of the issues under consideration, the EAT granted permission for both parties to appeal to the Court of Appeal. However, it may be that neither elects to do so.

Notwithstanding this temporary caveat, the clarity provided by a binding EAT decision should be welcomed. Subject to an appeal, employers can now at least be confident that if they impose an 18 month ‘use it or lose it’ policy in relation to Euroleave for those workers on long term sick leave, this will be effective.

For a wider summery of the key issues involved in the interaction between holiday and sickness, see Sick leave during holiday and holidays during sick leave section of our website. EEF members should call us for further support.